Carrying value as of the balance sheet date of obligations incurred and payable. pertaining to goods and services received from vendors; and for costs that are statutory in nature, are incurred in connection with contractual obligations, or accumulate over time and for which invoices have not yet been received or will not be rendered. Examples include taxes, interest, rent, salaries and benefits, and utilities.

For an unclassified balance sheet, the amount due from customers or clients for goods or services that have been delivered or sold in the normal course of business, reduced to their estimated net realizable fair value by an allowance established by the entity of the amount it deems uncertain of collection.

Accumulated change in equity from transactions and other events and circumstances from non-owner sources, net of tax effect, at fiscal year-end. Excludes Net Income (Loss), and accumulated changes in equity from transactions resulting from investments by owners and distributions to owners. Includes foreign currency translation items, certain pension adjustments, and unrealized gains and losses on certain investments in debt and equity securities as well as changes in the fair value of derivatives related to the effective portion of a designated cash flow hedge.

Excess of issue price over par or stated value of the entity's capital stock and amounts received from other transactions involving the entity's stock or stockholders. Includes adjustments to additional paid in capital. Some examples of such adjustments include recording the issuance of debt with a beneficial conversion feature and certain tax consequences of equity instruments awarded to employees. Use this element for the aggregate amount of APIC associated with common AND preferred stock. For APIC associated with only common stock, use the element Additional Paid In Capital, Common Stock. For APIC associated with only preferred stock, use the element Additional Paid In Capital, Preferred Stock.

Sum of the carrying amounts as of the balance sheet date of all assets that are recognized. Assets are probable future economic benefits obtained or controlled by an entity as a result of past transactions or events.

The aggregate value (measured at the lower of net carrying value or fair value less cost of disposal) for assets of a disposal group, including a component of the entity (discontinued operation), to be sold or that has been disposed of through sale, as of the financial statement date.

Carrying amount as of the balance sheet date of long-lived, depreciable assets that include building structures held for productive use including any addition, improvement, or renovation to the structure, such as interior masonry, interior flooring, electrical, and plumbing.

Includes currency on hand as well as demand deposits with banks or financial institutions. It also includes other kinds of accounts that have the general characteristics of demand deposits in that the Entity may deposit additional funds at any time and also effectively may withdraw funds at any time without prior notice or penalty. Cash equivalents, excluding items classified as marketable securities, include short-term, highly liquid investments that are both readily convertible to known amounts of cash, and so near their maturity that they present minimal risk of changes in value because of changes in interest rates. Generally, only investments with original maturities of three months or less qualify under that definition. Original maturity means original maturity to the entity holding the investment. For example, both a three-month US Treasury bill and a three-year Treasury note purchased three months from maturity qualify as cash equivalents. However, a Treasury note purchased three years ago does not become a cash equivalent when its remaining maturity is three months. Compensating balance arrangements that do not legally restrict the withdrawal or usage of cash amounts may be reported as Cash and Cash Equivalents, while legally restricted deposits held as compensating balances against borrowing arrangements, contracts entered into with others, or company statements of intention with regard to particular deposits should not be reported as cash and cash equivalents.

Represents the caption on the face of the balance sheet to indicate that the entity has entered into (1) purchase or supply arrangements that will require expending a portion of its resources to meet the terms thereof, and (2) is exposed to potential losses or, less frequently, gains, arising from (a) possible claims against a company's resources due to future performance under contract terms, and (b) possible losses or likely gains from uncertainties that will ultimately be resolved when one or more future events that are deemed likely to occur do occur or fail to occur. This caption alerts the reader that one or more notes to the financial statements disclose pertinent information about the entity's commitments and contingencies.

Dollar value of issued common stock whether issued at par value, no par or stated value. This item includes treasury stock repurchased by the entity. Note: elements for number of common shares, par value and other disclosure concepts are in another section within stockholders' equity.

Including the current and noncurrent portions, carrying amount of debt identified as being convertible into another form of financial instrument (typically the entity's common stock) as of the balance-sheet date, which originally required full repayment more than twelve months after issuance or greater than the normal operating cycle of the company.

Aggregate carrying value as of the balance sheet date of the liabilities for all deferred compensation arrangements. Represents currently earned compensation under compensation arrangements that is not actually paid until a later date.

The cumulative amount for all deferred tax liabilities as of the balance sheet date arising from temporary differences between accounting income in accordance with generally accepted accounting principles and tax-basis income that will result in future taxable income exceeding future accounting income.

The cumulative difference between the rental payments required by a lease agreement and the rental income or expense recognized on a straight-line basis, or other systematic and rational basis more representative of the time pattern in which use or benefit is granted or derived from the leased property, expected to be recognized in income or expense over the term of the leased property, by the lessor or lessee, respectively. Such receivable should be reduced by allowances attributable to, for instance, credit risk associated with a lessee.

Total carrying amount of consideration received or receivable as of the balance sheet date representing potential earnings that were not as yet recognized as revenue or other forms of income in conformity with GAAP.

Total investments in (A) an entity in which the entity has significant influence, but does not have control, (B) subsidiaries that are not required to be consolidated and are accounted for using the equity and or cost method, and (C) an entity in which the reporting entity shares control of the entity with another party or group. Includes long-term advances receivable form a party that is affiliated with the reporting entity by means of direct or indirect ownership.

Sum of the carrying amounts as of the balance sheet date of all liabilities that are recognized. Liabilities are probable future sacrifices of economic benefits arising from present obligations of an entity to transfer assets or provide services to other entities in the future.

The limited partner's ownership share in the capital account balance. The limited partners are partners of a publicly traded limited partnership or master limited partnership. Limited partners have limited liability and do not manage the partnership.

The carrying value as of the balance sheet date of the current and noncurrent portions of long-term obligations drawn from a line of credit, which is a bank's commitment to make loans up to a specific amount. Examples of items that might be included in the application of this element may consist of letters of credit, standby letters of credit, and revolving credit arrangements, under which borrowings can be made up to a maximum amount as of any point in time conditional on satisfaction of specified terms before, as of and after the date of drawdowns on the line. Includes short-term obligations that would normally be classified as current liabilities but for which (a) postbalance sheet date issuance of a long term obligation to refinance the short term obligation on a long term basis, or (b) the enterprise has entered into a financing agreement that clearly permits the enterprise to refinance the short-term obligation on a long term basis and the following conditions are met (1) the agreement does not expire within 1 year and is not cancelable by the lender except for violation of an objectively determinable provision, (2) no violation exists at the BS date, and (3) the lender has entered into the financing agreement is expected to be financially capable of honoring the agreement.

Total of all Stockholders' Equity (deficit) items, net of receivables from officers, directors owners, and affiliates of the entity which is directly or indirectly attributable to that ownership interest in subsidiary equity which is not attributable to the parent (noncontrolling interest, minority interest).

Including the current and noncurrent portions, carrying value as of the balance sheet date of all notes and loans payable (with maturities initially due after one year or beyond the operating cycle if longer).

For an unclassified balance sheet, an amount representing an agreement for an unconditional promise by the maker to pay the Entity (holder) a definite sum of money at a future date, net of any write-downs taken for collection uncertainty on the part of the holder. Such amount may include accrued interest receivable in accordance with the terms of the note. The note also may contain provisions and related items including a discount or premium, payable on demand, secured, or unsecured, interest bearing or noninterest bearing, among myriad other features and characteristics.

Carrying amount as of the balance sheet date of assets not otherwise specified in the taxonomy. Also serves as the sum of assets not individually reported in the financial statements, or not separately disclosed in notes.

Carrying amount as of the balance sheet date of liabilities not otherwise specified in the taxonomy. Also serves as the sum of liabilities not individually reported in the financial statements, or not separately disclosed in notes.

Dollar value of issued nonredeemable preferred stock (or preferred stock redeemable solely at the option of the issuer) whether issued at par value, no par or stated value. This item includes treasury stock repurchased by the entity. Note: elements for number of nonredeemable preferred shares, par value and other disclosure concepts are in another section within stockholders' equity.

Represents a total which may include the following: (1) land available-for-sale; (2) land available-for-development; (3) investments in building and building improvements; (4) tenant allowances; (5) developments in-process; (6) rental properties; and (7) other real estate investments.

The carrying amounts of cash and cash equivalent items which are restricted as to withdrawal or usage. Restrictions may include legally restricted deposits held as compensating balances against borrowing arrangements, contracts entered into with others, or entity statements of intention with regard to particular deposits; however, time deposits and short-term certificates of deposit are not generally included in legally restricted deposits. Excludes compensating balance arrangements that are not agreements which legally restrict the use of cash amounts shown on the balance sheet. This element is for unclassified presentations; for classified presentations there is a separate and distinct element.

Total of all Stockholders' Equity (deficit) items, net of receivables from officers, directors owners, and affiliates of the entity which are attributable to the parent. The amount of the economic entity's stockholders' equity attributable to the parent excludes the amount of stockholders' equity which is allocable to that ownership interest in subsidiary equity which is not attributable to the parent (noncontrolling interest, minority interest). This excludes temporary equity and is sometimes called permanent equity.

Total of Stockholders' Equity (deficit) items, net of receivables from officers, directors owners, and affiliates of the entity including portions attributable to both the parent and noncontrolling interests (previously referred to as minority interest), if any. The entity including portions attributable to the parent and noncontrolling interests is sometimes referred to as the economic entity. This excludes temporary equity and is sometimes called permanent equity.

Including the current and noncurrent portions, carrying value as of the balance sheet date of uncollateralized debt obligations (with maturities initially due after one year or beyond the operating cycle if longer).

This element represents costs incurred by the lessor that are (a) costs to originate a lease incurred in transactions with independent third parties that (i) result directly from and are essential to acquire that lease and (ii) would not have been incurred had that leasing transaction not occurred and (b) certain costs directly related to specified activities performed by the lessor for that lease. Those activities are: evaluating the prospective lessee's financial condition; evaluating and recording guarantees, collateral, and other security arrangements; negotiating lease terms; preparing and processing lease documents; and closing the transaction. This element is net of accumulated amortization, combined with, for an unclassified balance sheet, the carrying amount (net of accumulated amortization) as of the balance sheet date of capitalized costs associated with the issuance of debt instruments (for example, legal, accounting, underwriting, printing, and registration costs) that will be charged against earnings over the life of the debt instruments to which such costs pertain.

Including the current and noncurrent portions, carrying amount of debt identified as being exchangeable into another form of financial instrument (typically the entity's common stock) as of the balance-sheet date, which originally required full repayment more than twelve months after issuance or greater than the normal operating cycle of the company.

Total investments in Toys "R" Us: (A) an entity in which the entity has significant influence, but does not have control, (B) subsidiaries that are not required to be consolidated and are accounted for using the equity and or cost method, and (C) an entity in which the reporting entity shares control of the entity with another party or group. Includes long-term advances receivable form a party that is affiliated with the reporting entity by means of direct or indirect ownership.

The valuation allowance as of the balance sheet date to reduce the gross amount of receivables to estimated net realizable value, which would be presented in parentheses on the face of the balance sheet.

Total number of common shares of an entity that have been sold or granted to shareholders (includes common shares that were issued, repurchased and remain in the treasury). These shares represent capital invested by the firm's shareholders and owners, and may be all or only a portion of the number of shares authorized. Shares issued include shares outstanding and shares held in the treasury.

Total number of shares of common stock held by shareholders. May be all or portion of the number of common shares authorized. These shares represent the ownership interest of the common shareholders. Excludes common shares repurchased by the entity and held as Treasury shares. Shares outstanding equals shares issued minus shares held in treasury. Does not include common shares that have been repurchased.

Total number of nonredeemable preferred shares (or preferred stock redeemable solely at the option of the issuer) issued to shareholders (includes related preferred shares that were issued, repurchased and remain in the treasury). May be all or portion of the number of preferred shares authorized. Excludes preferred shares that are classified as debt.

Aggregate share number for all nonredeemable preferred stock (or preferred stock redeemable solely at the option of the issuer) held by stockholders. Does not include preferred shares that have been repurchased.

For an unclassified balance sheet, the accumulated amortization, as of the reporting date, which represents the periodic charge to earnings of initial direct costs which have been deferred and are being allocated over the lease term in proportion to the recognition of rental income, combined with, for an unclassified balance sheet, the accumulated amortization, as of the reporting date, representing the periodic charge to earnings of deferred costs which are associated with debt obligations existing as of the end of the period.

Total investments in Alexander's: (A) an entity in which the entity has significant influence, but does not have control, (B) subsidiaries that are not required to be consolidated and are accounted for using the equity and or cost method, and (C) an entity in which the reporting entity shares control of the entity with another party or group. Includes long-term advances receivable form a party that is affiliated with the reporting entity by means of direct or indirect ownership.

The valuation allowance as of the balance sheet date to reduce the amount of Mezzanine Loans receivables to estimated net realizable value, which would be presented in parentheses on the face of the balance sheet.

The valuation allowance as of the balance sheet date to reduce the gross amount of straight-line rent receivables receivables to estimated net realizable value, which would be presented in parentheses on the face of the balance sheet

The current period expense charged against earnings on long-lived, physical assets not used in production, and which are not intended for resale, to allocate or recognize the cost of such assets over their useful lives; or to record the reduction in book value of an intangible asset over the benefit period of such asset; or to reflect consumption during the period of an asset that is not used in production.

The difference between the carrying value and the sale price of real estate or properties that were intended to be sold or held for capital appreciation or rental income. This element refers to the gain (loss) included in earnings and not to the cash proceeds of the sale. This element is a noncash adjustment to net income when calculating net cash generated by operating activities using the indirect method.

The aggregate total of expenses of managing and administering the affairs of an entity, including affiliates of the reporting entity, which are not directly or indirectly associated with the manufacture, sale or creation of a product or product line.

This element represents the income or loss from continuing operations attributable to the economic entity which may also be defined as revenue less expenses and taxes from ongoing operations before extraordinary items, cumulative effects of changes in accounting principles, and noncontrolling interest.

The amount of income (loss) from continuing operations available to each share of common stock outstanding during the reporting period and each share that would have been outstanding assuming the issuance of common shares for all dilutive potential common shares outstanding during the reporting period.

This element represents the overall income (loss) from a disposal group that is classified as a component of the entity, net of income tax, reported as a separate component of income before extraordinary items and the cumulative effect of accounting changes, which is apportioned to that ownership interest in subsidiary equity which is not attributable to the parent (noncontrolling interest, minority interest). This item includes the following (net of tax): income (loss) from operations during the phase-out period, gain (loss) on disposal, provision (or any reversals of earlier provisions) for loss on disposal, and adjustments of a prior period gain (loss) on disposal.

This item represents the entity's proportionate share for the period of the net income (loss) of its investee (such as unconsolidated subsidiaries and joint ventures) to which the equity method of accounting is applied. Such amount typically reflects adjustments similar to those made in preparing consolidated statements, including adjustments to eliminate intercompany gains and losses, and to amortize, if appropriate, any difference between cost and underlying equity in net assets of the investee at the date of investment.

Income derived from investments in debt and equity securities and on cash and cash equivalents. Interest income represents earnings which reflect the time value of money or transactions in which the payments are for the use or forbearance of money. Dividend income represents a distribution of earnings to shareholders by investee companies.

The portion of consolidated profit or loss for the period, net of income taxes, which is attributable to the parent. If the entity does not present consolidated financial statements, the amount of profit or loss for the period, net of income taxes.

Generally recurring costs associated with normal operations except for the portion of these expenses which can be clearly related to production and included in cost of sales or services. Excludes Selling, General and Administrative Expense.

Generally recurring costs associated with normal operations except for the portion of these expenses which can be clearly related to production and included in cost of sales or services. Includes selling, general and administrative expense.

In accordance with the provisions of their lease agreement, this element represents allowable charges due a landlord from its tenant. In retail store and office building leases, for example, tenant reimbursements may cover items such as taxes, utilities, and common area expenses.

Number of [basic] shares, after adjustment for contingently issuable shares and other shares not deemed outstanding, determined by relating the portion of time within a reporting period that common shares have been outstanding to the total time in that period.

Revenue, comprised of base and incentive revenue derived from the management of joint ventures, managing third-party properties, or another entity's operations, and other real estate revenue not otherwise specified in the taxonomy.

This item represents the entity's proportionate share for the period of the net income (loss) of its investee, Alexander's, (such as unconsolidated subsidiaries and joint ventures) to which the equity method of accounting is applied. Such amount typically reflects adjustments similar to those made in preparing consolidated statements, including adjustments to eliminate intercompany gains and losses, and to amortize, if appropriate, any difference between cost and underlying equity in net assets of the investee at the date of investment.

This item represents the entity's proportionate share for the period of the net income (loss) of its investee, Toys "R" Us, (such as unconsolidated subsidiaries and joint ventures) to which the equity method of accounting is applied. Such amount typically reflects adjustments similar to those made in preparing consolidated statements, including adjustments to eliminate intercompany gains and losses, and to amortize, if appropriate, any difference between cost and underlying equity in net assets of the investee at the date of investment.

Adjustment to Additional Paid in Capital resulting from the recognition of deferred taxes for the temporary difference of the convertible debt with a beneficial conversion feature. A beneficial conversion feature is a nondetachable conversion feature that is in-the-money.

Adjustment to additional paid in capital resulting from the recognition of convertible debt instruments as two separate components - a debt component and an equity component. This bifurcation may result in a basis difference associated with the liability component that represents a temporary difference for purposes of applying Statement of Financial Accounting Standards (FAS) 109, Accounting for Income Taxes. The initial recognition of deferred taxes for the tax effect of that temporary difference is as an adjustment to additional paid in capital.

This item represents the gross unrealized losses for securities which are categorized neither as held-to-maturity nor trading securities. Such gross unrealized losses are the excess of the carrying value of the Available-for-sale Securities over their fair value as of the reporting date. Such gross unrealized losses are included in other comprehensive income in the statement of shareholders' equity, unless the Available-for-sale Security is designated as a hedge or is determined to have had an other than temporary decline in fair value below its amortized cost basis. All or a portion of the unrealized holding loss of an Available-for-sale Security that is designated as being hedged in a fair value hedge shall be recognized in earnings during the period of the hedge, as should other than temporary declines in fair value below costs basis.

Total of Stockholders' Equity (deficit) items, net of receivables from officers, directors owners, and affiliates of the entity including portions attributable to both the parent and noncontrolling interests (previously referred to as minority interest), if any. The entity including portions attributable to the parent and noncontrolling interests is sometimes referred to as the economic entity. This excludes temporary equity and is sometimes called permanent equity.

Value of stock issued during the period from a dividend reinvestment plan (DRIP). A dividend reinvestment plan allows the holder of the stock to reinvest dividends paid to them by the entity on new issues of stock by the entity.

Transactions that do not result in cash inflows or outflows in the period in which they occur, but affect net income and thus are removed when calculating net cash flow from operating activities using the indirect cash flow method. This element is used when there is not a more specific and appropriate element.

Adjustment to Additional Paid in Capital resulting from the recognition of deferred taxes for the temporary difference of the convertible debt with a beneficial conversion feature. A beneficial conversion feature is a nondetachable conversion feature that is in-the-money.

This item represents the gross unrealized losses for securities which are categorized neither as held-to-maturity nor trading securities. Such gross unrealized losses are the excess of the carrying value of the Available-for-sale Securities over their fair value as of the reporting date. Such gross unrealized losses are included in other comprehensive income in the statement of shareholders' equity, unless the Available-for-sale Security is designated as a hedge or is determined to have had an other than temporary decline in fair value below its amortized cost basis. All or a portion of the unrealized holding loss of an Available-for-sale Security that is designated as being hedged in a fair value hedge shall be recognized in earnings during the period of the hedge, as should other than temporary declines in fair value below costs basis.

Includes currency on hand as well as demand deposits with banks or financial institutions. It also includes other kinds of accounts that have the general characteristics of demand deposits in that the Entity may deposit additional funds at any time and also effectively may withdraw funds at any time without prior notice or penalty. Cash equivalents, excluding items classified as marketable securities, include short-term, highly liquid investments that are both readily convertible to known amounts of cash, and so near their maturity that they present minimal risk of changes in value because of changes in interest rates. Generally, only investments with original maturities of three months or less qualify under that definition. Original maturity means original maturity to the entity holding the investment. For example, both a three-month US Treasury bill and a three-year Treasury note purchased three months from maturity qualify as cash equivalents. However, a Treasury note purchased three years ago does not become a cash equivalent when its remaining maturity is three months. Compensating balance arrangements that do not legally restrict the withdrawal or usage of cash amounts may be reported as Cash and Cash Equivalents, while legally restricted deposits held as compensating balances against borrowing arrangements, contracts entered into with others, or company statements of intention with regard to particular deposits should not be reported as cash and cash equivalents.

This item represents disclosure of the amount of dividends or other distributions received from unconsolidated subsidiaries, certain corporate joint ventures, and certain noncontrolled corporation; these investments are accounted for under the equity method of accounting. This element excludes distributions that constitute a return of investment, which are classified as investing activities.

The difference between the carrying value and the sale price of real estate or properties that were intended to be sold or held for capital appreciation or rental income. This element refers to the gain (loss) included in earnings and not to the cash proceeds of the sale. This element is a noncash adjustment to net income when calculating net cash generated by operating activities using the indirect method.

This element represents the amount by which the carrying amount exceeds the fair value of the investment. The amount is charged to income if the decline in fair value is deemed to be other than temporary.

The net cash inflow (outflow) for the net change associated with funds that are not available for withdrawal or use (such as funds held in escrow) and are associated with underlying transactions that are classified as investing activities.

The net cash from (used in) all of the entity's operating activities, including those of discontinued operations, of the reporting entity. Operating activities generally involve producing and delivering goods and providing services. Operating activity cash flows include transactions, adjustments, and changes in value that are not defined as investing or financing activities.

The net cash from (used in) all of the entity's operating activities, including those of discontinued operations, of the reporting entity. Operating activities include all transactions and events that are not defined as investing or financing activities. Operating activities generally involve producing and delivering goods and providing services. Cash flows from operating activities are generally the cash effects of transactions and other events that enter into the determination of net income.

The cash outflow associated with the purchase of or advances to an equity method investments, which are investments in joint ventures and entities in which the entity has an equity ownership interest normally of 20 to 50 percent and exercises significant influence.

The cash outflow to acquire an agreement for an unconditional promise by the maker to pay the entity (holder) a definite sum of money at a future date. Such amount may include accrued interest receivable in accordance with the terms of the note. The note also may contain provisions including a discount or premium, payable on demand, secured, or unsecured, interest bearing or noninterest bearing, among myriad other features and characteristics.

The cash outflow from the acquisition of a piece of land, anything permanently fixed to it, including buildings, structures on it and so forth; includes real estate intended to generate income for the owner; excludes real estate acquired for use by the owner.

The amount of previously reported deferred or unearned revenue that was recognized as revenue during the period. For cash flows, this element primarily pertains to amortization of deferred credits on long-term arrangements. As a noncash item, it is deducted from net income when calculating cash provided by (used in) operations using the indirect method.

The cash outflow from the repayment of debt instrument which can be exchanged for a specified amount of another security, typically the entity's common stock, at the option of the issuer or the holder and the cash outflow from the repayment of senior unsecured notes.

This item represents disclosure of the amount of capital distributions received from unconsolidated subsidiaries, certain corporate joint ventures, and certain noncontrolled corporation; these investments are accounted for under the equity method of accounting.

This item represents the entity's proportionate share for the period of the net income (loss) of its investee (such as unconsolidated subsidiaries and joint ventures) to which the equity method of accounting is applied, including Alexander's and Toys "R" Us. Such amount typically reflects adjustments similar to those made in preparing consolidated statements, including adjustments to eliminate intercompany gains and losses, and to amortize, if appropriate, any difference between cost and underlying equity in net assets of the investee at the date of investment.

The cash outflow for securities or other assets acquired with excess cash, having ready marketability, which qualify for treatment as an investing activity based on management's intention and intended by management to be liquidated, if necessary, within the current operating cycle.

The cash outflow to return capital to noncontrolled interest, which generally occurs when noncontrolling shareholders reduce their ownership stake (in a subsidiary of the entity). This element does not include dividends paid to noncontrolling shareholders.

The cash inflow from a loan granted to related parties where one party can exercise control or significant influence over another party; including affiliates, owners or officers and their immediate families, and so forth.

The amount of cash paid during the current period for interest owed on money borrowed that is not charged as an expense but rather is capitalized based on the long term nature of the use of the borrowed funds.

Vornado Realty Trust (“Vornado”) is a fully-integrated real estate investment trust (“REIT”) and conducts its business through, and substantially all of its interests in properties are held by, Vornado Realty L.P., a Delaware limited partnership (the “Operating Partnership”). Vornado is the sole general partner of, and owned approximately 92.5% of the common limited partnership interest in, the Operating Partnership at December 31, 2009. All references to “we,” “us,” “our,” the “Company” and “Vornado” refer to Vornado Realty Trust and its consolidated subsidiaries, including the Operating Partnership.

On May 14, 2009, our Board of Trustees executed its long-planned management succession strategy and elected Michael D. Fascitelli, as our Chief Executive Officer, succeeding Steven Roth, who continues to serve as Chairman of the Board.

As of December 31, 2009, we own directly or indirectly:

Office Properties:

(i)all or portions of 28 properties aggregating 16.2 million square feet in the New York City metropolitan area (primarily Manhattan);

(ii) all or portions of 84 properties aggregating 18.6 million square feet in the Washington, DC / Northern Virginia areas;

Retail Properties:

(iv) 162 properties aggregating 22.6 million square feet, including 3.9 million square feet owned by tenants on land leased from us, primarily in Manhattan, the northeast states, California and Puerto Rico;

Merchandise Mart Properties:

(v) 8 properties aggregating 8.9 million square feet of showroom and office space, including the 3.5 million square foot Merchandise Mart in Chicago;

Toys “R” Us, Inc. ("Toys"):

(vi) a 32.7% interest in Toys which owns and/or operates 1,567 stores worldwide, including 851 stores in the United States and 716 stores internationally;

Other Real Estate Investments:

(vii) 32.4% of the common stock of Alexander’s, Inc. (NYSE: ALX), which has seven properties in the greater New York metropolitan area;

(viii) the Hotel Pennsylvania in New York City;

(ix) mezzanine loans on real estate; and

(x) other real estate and investments, including marketable securities.

Description containing the consolidation and basis of presentation of financial statements disclosure. May be provided in more than one note to the financial statements, as long as users are provided with an understanding of (1) the significant judgments and assumptions made by an enterprise in determining whether it must consolidate a VIE and/or disclose information about its involvement with a VIE, (2) the nature of restrictions on a consolidated VIE's assets reported by an enterprise in its statement of financial position, including the carrying amounts of such assets, (3) the nature of, and changes in, the risks associated with an enterprise's involvement with the VIE, and (4) how an enterprise's involvement with the VIE affects the enterprise's financial position, financial performance, and cash flows. Describes procedure if disclosures are provided in more than one note to the financial statements and description of all significant accounting policies of the reporting entity.

The accompanying consolidated financial statements include the accounts of Vornado Realty Trust and its majority-owned subsidiary, Vornado Realty L.P. All significant inter-company amounts have been eliminated. We account for unconsolidated partially owned entities on the equity method of accounting. Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America, which require us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ materially from those estimates. Certain prior year balances have been reclassified in order to conform to current year presentation.

On July 1, 2009, the Financial Accounting Standards Board (“FASB”) established the Accounting Standards Codification (“ASC”) as the primary source of authoritative GAAP recognized by the FASB to be applied by nongovernmental entities. Although the establishment of the ASC did not change current GAAP, it did change the way we refer to GAAP throughout this document to reflect the updated referencing convention.

Impact of Retrospective Application of New Accounting Pronouncements

During 2009, we paid quarterly dividends to our common shareholders in a combination of cash and stock and retrospectively adjusted weighted average common shares outstanding in the computations of income per share to include the additional common shares resulting from these dividends in the earliest periods presented in each of our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2009, June 30, 2009 and September 30, 2009 and our Current Report on Form 8-K, issued on October 13, 2009, in which we elected to recast our consolidated financial statements in our Annual Report on Form 10-K/A (Amendment No. 1) for the year ended December 31, 2008. On December 2, 2009, the FASB ratified the consensus reached in EITF 09-E, Accounting for Distribution to Shareholders with Components of Stock and Cash (“EITF 09-E”) as codified through Accounting Standards Update (“ASU”) 2010-1 to ASC 505, Equity. EITF 09-E requires an entity to include the additional common shares resulting from the stock portion of these distributions prospectively in the periods following their issuance in all computations of income per share rather than retrospectively as we had previously done. As a result, we have adjusted our computations of income per share presented herein to exclude the additional shares resulting from these dividends in periods prior to their issuance. Below is a reconciliation of previously reported income per share to the amounts presented herein.

For the Year Ended December 31, 2008

As Reported

EITF 09-E

As Adjusted

Income per common share – basic:

Income from continuing operations

$

0.92

$

0.02

$

0.94

Net income

1.89

0.07

1.96

Income per common share – diluted:

Income from continuing operations

0.90

0.01

0.91

Net income

1.84

0.07

1.91

For the Year Ended December 31, 2007

As Reported

EITF 09-E

As Adjusted

Income per common share – basic:

Income from continuing operations

$

2.70

$

0.08

$

2.78

Net income

3.07

0.11

3.18

Income per common share – diluted:

Income from continuing operations

2.59

0.07

2.66

Net income

2.95

0.10

3.05

On January 1, 2009, we adopted the provisions of ASC 470-20, Debt with Conversion and Other Options, which was required to be applied retrospectively.The adoption affected the accounting for our convertible and exchangeable senior debentures by requiring the initial proceeds from their sale to be allocated between a debt component and an equity component in a manner that results in interest expense on the debt component at our nonconvertible debt borrowing rate on the date of issue. The initial debt components of our $1.4 billion Convertible Senior Debentures, $1 billion Convertible Senior Debentures and $500 million Exchangeable Senior Debentures were $1,241,286,000, $926,361,000 and $457,699,000, respectively, based on the fair value of similar nonconvertible instruments issued at that time. The aggregate initial debt discount of $216,655,000 after original issuance costs allocated to the equity component was recorded in “additional capital” in our consolidated statement of changes in equity. The discount is amortized using the effective interest method over the period the debt is expected to remain outstanding (i.e., the earliest date the holders may require us to repurchase the debentures), which resulted in $39,546,000 and $30,418,000 of additional interest expense in the years ended December 31, 2008 and 2007, respectively.

In December 2007, the FASB issued an update to ASC 810, Consolidation, which requires a noncontrolling interest in a subsidiary to be reported as equity and the amount of consolidated net income specifically attributable to the noncontrolling interest to be identified in the consolidated financial statements. It also calls for consistency in the manner of reporting changes in the parent’s ownership interest and requires fair value measurement of any noncontrolling equity investment retained in a deconsolidation. The amended guidance became effective on January 1, 2009 and resulted in (i) the reclassification of minority interests in consolidated subsidiaries to noncontrolling interests in consolidated subsidiaries, a component of permanent equity on our consolidated balance sheets, (ii) the reclassification of minority interest expense to net income attributable to noncontrolling interests, on our consolidated statements of income, and (iii) additional disclosures, including a consolidated statement of changes in equity in quarterly reporting periods.

In December 2007, the FASB issued an update to ASC 805, Business Combinations, which applies to all transactions and other events in which one entity obtains control over one or more other businesses. It also broadens the fair value measurement and recognition of assets acquired, liabilities assumed, and interests transferred as a result of business combinations; and acquisition related costs will generally be expensed rather than included as part of the basis of the acquisition. The amended guidance also expands required disclosures to improve the ability to evaluate the nature and financial effects of business combinations. The amended guidance became effective for all transactions entered into on or after January 1, 2009. The adoption of this guidance on January 1, 2009 did not have any effect on our consolidated financial statements because there have been no acquisitions during 2009.

In March 2008, the FASB issued an update to ASC 815, Derivatives and Hedging, which requires enhanced disclosures related to derivative instruments and hedging activities, including disclosures regarding how an entity uses derivative instruments, how derivative instruments and related hedged items are accounted for and the impact of derivative instruments and related hedged items on an entity’s financial position, financial performance and cash flows. It also provided a new two-step model to be applied in determining whether a financial instrument or an embedded feature is indexed to an issuer’s own stock. The amended guidance became effective on January 1, 2009. The adoption of this guidance on January 1, 2009 did not have a material effect on our consolidated financial statements.

In June 2008, the FASB issued an update to ASC 260, Earnings Per Share, which requires companies to treat unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents as “participating securities” and include such securities in the computation of earnings per share pursuant to the two-class method as described in ASC 260. The amended guidance became effective on January 1, 2009 and required all prior period earnings per share data presented, to be adjusted retroactively. The adoption of this guidance on January 1, 2009 did not have a material effect on our computation of income per share.

In April 2009, the FASB issued an amendment to the guidance for other than temporary impairments (“OTTI”) of investments in debt securities, which changes the presentation of OTTI in financial statements. Under this guidance, if an OTTI debt security is intended to be sold or required to be sold prior to the recovery of its carrying amount, the full amount of the impairment loss is charged to earnings. Otherwise, losses on debt securities must be separated into two categories, the portion which is considered credit loss, which is charged to earnings, and the portion due to other factors, which is charged to other comprehensive income (loss), a component of balance sheet equity. When an unrealized loss on a fixed maturity security is not considered OTTI, the unrealized loss continues to be charged to other comprehensive income (loss) and not to earnings. The adoption of this guidance on April 1, 2009 did not have any effect on our consolidated financial statements.

In June 2009, the FASB issued an update to ASC 810, Consolidation, which modifies the existing quantitative guidance used in determining the primary beneficiary of a variable interest entity (“VIE”) by requiring entities to qualitatively assess whether an enterprise is a primary beneficiary, based on whether the entity has (i) power over the significant activities of the VIE, and (ii) an obligation to absorb losses or the right to receive benefits that could be potentially significant to the VIE. The adoption of this guidance on January 1, 2010 did not have a material effect on our consolidated financial statements.

Significant Accounting Policies

Real Estate: Real estate is carried at cost, net of accumulated depreciation and amortization. Betterments, major renewals and certain costs directly related to the improvement and leasing of real estate are capitalized. Maintenance and repairs are expensed as incurred. For redevelopment of existing operating properties, the net book value of the existing property under redevelopment plus the cost for the construction and improvements incurred in connection with the redevelopment are capitalized to the extent the capitalized costs of the property do not exceed the estimated fair value of the redeveloped property when complete. If the cost of the redeveloped property, including the undepreciated net book value of the property carried forward, exceeds the estimated fair value of redeveloped property, the excess is charged to expense. Depreciation is provided on a straight-line basis over estimated useful lives which range from 7 to 40 years. Tenant allowances are amortized on a straight-line basis over the lives of the related leases, which approximate the useful lives of the assets. Additions to real estate include interest expense capitalized during construction of $17,256,000 and $63,063,000, for the years ended December 31, 2009 and 2008, respectively.

Upon the acquisition of real estate, we assess the fair value of acquired assets (including land, buildings and improvements, identified intangibles such as acquired above and below-market leases and acquired in-place leases and tenant relationships) and acquired liabilities and we allocate purchase price based on these assessments. We assess fair value based on estimated cash flow projections that utilize appropriate discount and capitalization rates and available market information. Estimates of future cash flows are based on a number of factors including historical operating results, known trends, and market/economic conditions.

Our properties, including any related intangible assets, are individually reviewed for impairment each quarter, if events or circumstances change indicating that the carrying amount of the assets may not be recoverable. An impairment exists when the carrying amount of an asset exceeds the aggregate projected future cash flows over the anticipated holding period on an undiscounted basis. An impairment loss is measured based on the excess of the property’s carrying amount over its estimated fair value. Impairment analyses are based on our current plans, intended holding periods and available market information at the time the analyses are prepared. If our estimates of the projected future cash flows, anticipated holding periods, or market conditions change, our evaluation of impairment losses may be different and such differences could be material to our consolidated financial statements. The evaluation of anticipated cash flows is subjective and is based, in part, on assumptions regarding future occupancy, rental rates and capital requirements that could differ materially from actual results. Plans to hold properties over longer periods decrease the likelihood of recording impairment losses. The table below summarizes non-cash impairment and other losses recognized in the years ended December 31, 2009, 2008 and 2007.

(Amounts in thousands)

For the Year Ended December 31,

2009

2008

2007

Undeveloped land

$

38,347

$

12,500

$

—

Real estate – development related

28,820

40,668

—

Condominium units held for sale (see page 125)

13,667

23,625

—

Other real estate assets

6,989

1,645

—

Cost of real estate acquisitions not consummated

—

3,009

10,375

$

87,823

$

81,447

$

10,375

Identified Intangibles: We record acquired intangible assets (including acquired above-market leases, tenant relationships and acquired in-place leases) and acquired intangible liabilities (including below–market leases) at their estimated fair value separate and apart from goodwill. We amortize identified intangibles that have finite lives over the period they are expected to contribute directly or indirectly to the future cash flows of the property or business acquired. Intangible assets that are subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. An impairment loss is recognized if the carrying amount of an intangible asset, including related real estate, if appropriate, is not recoverable and its carrying amount exceeds its estimated fair value. As of December 31, 2009 and 2008, the carrying amounts of identified intangible assets, a component of “other assets” on our consolidated balance sheets, were $442,510,000 and $522,719,000, respectively. In addition, the carrying amounts of identified intangible liabilities, a component of “deferred credit” on our consolidated balance sheets, were $633,492,000 and $719,822,000, respectively.

Partially Owned Entities: In determining whether we have a controlling interest in a partially owned entity and the requirement to consolidate the accounts of that entity, we consider factors such as ownership interest, board representation, management representation, authority to make decisions, and contractual and substantive participating rights of the partners/members as well as whether the entity is a variable interest entity in which we have power over significant activities of the entity and the obligation to absorb a majority of the entity’s expected losses, if they occur, or receive a majority of the expected residual returns, if they occur, or both. We have concluded that we do not control a partially owned entity if the entity is not considered a variable interest entity and the approval of all of the partners/members is contractually required with respect to major decisions, such as operating and capital budgets, the sale, exchange or other disposition of real property, the hiring of a chief executive officer, the commencement, compromise or settlement of any lawsuit, legal proceeding or arbitration or the placement of new or additional financing secured by assets of the venture. This is the case with respect to our 50% interests in Monmouth Mall, MartParc Wells, MartParc Orleans, 968 Third Avenue, West 57th Street properties and 825 Seventh Avenue. We account for investments on the equity method when the requirements for consolidation are not met, and we have significant influence over the operations of the investee. Equity method investments are initially recorded at cost and subsequently adjusted for our share of net income or loss and cash contributions and distributions made during the year. Investments that do not qualify for consolidation or equity method accounting are accounted for on the cost method.Our investments in partially owned entities are reviewed for impairment each quarter, if events or circumstances change indicating that the carrying amount of our investments may not be recoverable. The ultimate realization of our investments in partially owned entities is dependent on a number of factors, including the performance of each investment and market conditions. We will record an impairment loss if we determine that a decline in the value of an investment is other-than-temporary. The table below summarizes non-cash impairment losses recognized on investments in partially owned entities in the years ended December 31, 2009, 2008 and 2007.

For the Year Ended December 31,

(Amounts in thousands)

2009

2008

2007

Investment in Lexington Realty Trust

$

—

$

107,882

$

—

Other

17,820

96,037

—

$

17,820

$

203,919

$

—

Mezzanine Loans Receivable: We invest in mezzanine loans to entities which have significant real estate assets. These investments, which are subordinate to the mortgage loans secured by the real property, are generally secured by pledges of the equity interests of the entities owning the underlying real estate. We record these investments at the stated principal amount net of any unamortized discount or premium. We accrete or amortize any discounts or premiums over the life of the related loan receivable utilizing the effective interest method, or straight-line method if the result is not materially different.

We evaluate the collectibility of both interest and principal of each of our loans each quarter, if circumstances warrant, to determine whether they are impaired. A loan is impaired when, based on current information and events, it is probable that we will be unable to collect all amounts due according to the existing contractual terms. When a loan is impaired, the amount of the loss accrual is calculated by comparing the carrying amount of the investment to the estimated fair value of the loan or, as a practical expedient, to the value of the collateral if the loan is collateral dependent. Interest on impaired loans is recognized when received in cash. In the years ended December 31, 2009 and 2007, we recorded loss accruals aggregating $190,738,000 and $57,000,000, respectively. In 2008, upon sale of a sub-participation in a loan, we reversed $10,300,000 of the $57,000,000 loss accrual recognized in 2007. Loss accruals are based on our continuing review of these loans and while management believes it uses the best information available to establish these allowances, future adjustments may become necessary if there are changes in economic conditions or specific circumstances.

Cash and Cash Equivalents: Cash and cash equivalents consist of highly liquid investments with original maturities of three months or less. The majority of our cash and cash equivalents are held at major commercial banks which may at times exceed the Federal Deposit Insurance Corporation limit. To date, we have not experienced any losses on our invested cash.

Short-term Investments: Short-term investments consist of certificates of deposit placed through an account registry service (“CDARS”) with original maturities of 91 to 180 days. These investments are FDIC insured and classified as available-for-sale.

Allowance for Doubtful Accounts: We periodically evaluate the collectibility of amounts due from tenants and maintain an allowance for doubtful accounts for estimated losses resulting from the inability of tenants to make required payments under the lease agreements. We also maintain an allowance for receivables arising from the straight-lining of rents. This receivable arises from earnings recognized in excess of amounts currently due under the lease agreements. Management exercises judgment in establishing these allowances and considers payment history and current credit status in developing these estimates. As of December 31, 2009 and 2008, we had $46,708,000 and $32,834,000, respectively, in allowances for doubtful accounts. In addition, as of December 31, 2009 and 2008, we had $4,680,000 and $5,773,000, respectively, in allowances for receivables arising from the straight-lining of rents.

Deferred Charges: Direct financing costs are deferred and amortized over the terms of the related agreements as a component of interest expense. Direct costs related to successful leasing activities are capitalized and amortized on a straight-line basis over the lives of the related leases. All other deferred charges are amortized on a straightline basis, which approximates the effective interest rate method, in accordance with the terms of the agreements to which they relate.

Revenue Recognition: We have the following revenue sources and revenue recognition policies:

·Base Rent — income arising from tenant leases. These rents are recognized over the non-cancelable term of the related leases on a straight-line basis which includes the effects of rent steps and rent abatements under the leases. We commence rental revenue recognition when the tenant takes possession of the leased space and the leased space is substantially ready for its intended use. In addition, in circumstances in which we provide a tenant improvement allowance for improvements that are owned by the tenant, we recognize the allowance as a reduction of rental revenue on a straight-line basis over the term of the lease.

·Percentage Rent — income arising from retail tenant leases that is contingent upon the sales of the tenant exceeding a defined threshold. These rents are recognized only after the contingency has been removed (i.e., sales thresholds have been achieved).

·Hotel Revenue — income arising from the operation of the Hotel Pennsylvania which consists of rooms revenue, food and beverage revenue, and banquet revenue. Income is recognized when rooms are occupied. Food and beverage and banquet revenue is recognized when the services have been rendered.

·Trade Shows Revenue — income arising from the operation of trade shows, including rentals of booths. This revenue is recognized when the trade shows have occurred.

·Expense Reimbursements — revenue arising from tenant leases which provide for the recovery of all or a portion of the operating expenses and real estate taxes of the respective property. This revenue is accrued in the same periods as the expenses are incurred.

·Management, Leasing and Other Fees – income arising from contractual agreements with third parties or with partially owned entities. This revenue is recognized as the related services are performed under the respective agreements.

Condominium Units Held For Sale:Condominium units held for sale are carried at the lower of cost or expected net sales proceeds. As of December 31, 2009, condominiums held for sale, which are included in “other assets” on our consolidated balance sheet, aggregate $187,050,000 and consist of substantially completed units at our 40 East 66th Street property in Manhattan, The Bryant in Boston and Granite Park in Pasadena. Revenue from individual condominium unit sales are recognized upon closing of the sale (the “completed contract method”), as all conditions for full profit recognition have been met at that time. We use the relative sales value method to allocate costs. Net gains on sales of condominiums units are included in “net gains on disposition of wholly owned and partially owned assets other than depreciable real estate” on our consolidated statements of income. During 2009 and 2008, we recognized non-cash impairment losses related to certain of these condominiums aggregating $13,667,000 and $23,625,000, respectively, based on our assessments of the expected net sales proceeds associated with these condominium projects. These losses are included in “impairment and other losses” on our consolidated statements of income.

Derivative Instruments and Hedging Activities: ASC 815, Derivatives and Hedging, as amended, establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. As of December 31, 2009 and 2008, our derivative instruments consisted of interest rate caps which did not have a material affect on our consolidated financial statements. As required by ASC 815, we record all derivatives on the balance sheet at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative and the resulting designation. Derivatives used to hedge the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivatives used to hedge the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges.

For derivatives designated as fair value hedges, changes in the fair value of the derivative and the hedged item related to the hedged risk are recognized in earnings. For derivatives designated as cash flow hedges, the effective portion of changes in the fair value of the derivative is initially reported in other comprehensive income (loss) (outside of earnings) and subsequently reclassified to earnings when the hedged transaction affects earnings, and the ineffective portion of changes in the fair value of the derivative is recognized directly in earnings. We assess the effectiveness of each hedging relationship by comparing the changes in fair value or cash flows of the derivative hedging instrument with the changes in fair value or cash flows of the designated hedged item or transaction. For derivatives not designated as hedges, changes in fair value are recognized in earnings.

Income Per Share: Basic income per share is computed based on weighted average shares outstanding. Diluted income per share considers the effect of all potentially dilutive share equivalents, including outstanding employee stock options, restricted shares and convertible or redeemable securities.

Income Taxes: We operate in a manner intended to enable us to continue to qualify as a REIT under Sections 856-860 of the Internal Revenue Code of 1986, as amended. Under those sections, a REIT which distributes at least 90% of its REIT taxable income as a dividend to its shareholders each year and which meets certain other conditions will not be taxed on that portion of its taxable income which is distributed to its shareholders. We distribute to shareholders 100% of taxable income and therefore, no provision for Federal income taxes is required. Dividend distributions for the year ended December 31, 2009, were characterized, for Federal income tax purposes, as 63.9% ordinary income, 0.9% long-term capital gain and 35.2% return of capital. Dividend distributions for the year ended December 31, 2008 were characterized, for Federal income tax purposes, as 70.8% ordinary income and 29.2% return of capital. Dividend distributions for the year ended December 31, 2007 were characterized, for Federal income tax purposes, as 61.6% ordinary income and 38.4% long-term capital gain.

We have elected to treat certain consolidated subsidiaries, and may in the future elect to treat newly formed subsidiaries, as taxable REIT subsidiaries pursuant to an amendment to the Internal Revenue Code that became effective January 1, 2001. Taxable REIT subsidiaries may participate in non-real estate related activities and/or perform non-customary services for tenants and are subject to Federal and State income tax at regular corporate tax rates. Our taxable REIT subsidiaries had a combined current income tax liability of approximately $21,481,000 and $20,837,000 for the years ended December 31, 2009 and 2008, respectively, and have immaterial differences between the financial reporting and tax basis of assets and liabilities.

In connection with purchase accounting for H Street, in July 2005 and April 2007 we recorded an aggregate of $222,174,000 of deferred tax liabilities representing the differences between the tax basis and the book basis of the acquired assets and liabilities multiplied by the effective tax rate. We were required to record these deferred tax liabilities because H Street and its partially owned entities were operated as C Corporations at the time they were acquired. As of January 16, 2008, we had completed all of the actions necessary to enable these entities to elect REIT status effective for the tax year beginning on January 1, 2008. Consequently, in the first quarter of 2008, we reversed the deferred tax liabilities and recognized an income tax benefit of $222,174,000 in our consolidated statement of income.

The following table reconciles net income attributable to common shareholders to estimated taxable income for the years ended December 31, 2009, 2008 and 2007.

(Amounts in thousands)

2009

2008

2007

Net income attributable to common shareholders

$

49,093

$

302,206

$

484,362

Book to tax differences (unaudited):

Depreciation and amortization

247,023

233,426

145,131

Mezzanine loans receivable

171,380

(51,893

)

51,682

Straight-line rent adjustments

(83,959

)

(82,901

)

(70,450

)

Earnings of partially owned entities

(82,382

)

(50,855

)

12,093

Stock options

(32,643

)

(71,995

)

(88,752

)

Sale of real estate

3,923

3,687

(57,386

)

Reversal of deferred tax liability

—

(202,267

)

—

Derivatives

—

43,218

131,711

Other, net

81,936

171,763

13,256

Estimated taxable income

$

354,371

$

294,389

$

621,647

The net basis of our assets and liabilities for tax reporting purposes is approximately $3.1 billion lower than the amount reported in our consolidated financial statements.

Description containing the consolidation and basis of presentation of financial statements disclosure. May be provided in more than one note to the financial statements, as long as users are provided with an understanding of (1) the significant judgments and assumptions made by an enterprise in determining whether it must consolidate a VIE and/or disclose information about its involvement with a VIE, (2) the nature of restrictions on a consolidated VIE's assets reported by an enterprise in its statement of financial position, including the carrying amounts of such assets, (3) the nature of, and changes in, the risks associated with an enterprise's involvement with the VIE, and (4) how an enterprise's involvement with the VIE affects the enterprise's financial position, financial performance, and cash flows. Describes procedure if disclosures are provided in more than one note to the financial statements.

Toys

As of December 31, 2009, we own 32.7% of Toys. The business of Toys is highly seasonal. Historically, Toys’ fourth quarter net income accounts for more than 80% of its fiscal year net income. We account for our investment in Toys under the equity method and because Toys’ fiscal year ends on the Saturday nearest January 31, we record our 32.7% share of Toys’ net income or loss on a one-quarter lag basis. As of December 31, 2009, the carrying amount of our investment in Toys does not differ materially from our share of the equity in net assets of Toys on a purchase accounting basis.

During 2009, we recognized $13,946,000 for our share of income from the reversal of previously recognized deferred financing cost amortization expense, which we initially recorded as a reduction of the basis of our investment in Toys. During 2008, in connection with an audit of Toys’ purchase accounting basis financial statements for its fiscal years 2006 and 2007, it was determined that the purchase accounting basis income tax expense was understated. Accordingly, we recognized $14,900,000 of income tax expense for our share of this non-cash charge. This non-cash charge had no effect on cash actually paid for income taxes or Toys’ previously issued Recap basis consolidated financial statements.

Below is a summary of Toys’ latest available financial information presented on a purchase accounting basis:

(Amounts in thousands)

Balance Sheet:

As of October 31, 2009

As of November 1, 2008

Assets

$

12,589,000

$

12,410,000

Liabilities

11,198,000

11,393,000

Noncontrolling interests

112,000

88,000

Toys “R” Us, Inc. equity

1,279,000

929,000

For the Twelve Months Ended

Income Statement:

October 31, 2009

November 1, 2008

November 3, 2007

Total revenue

$

13,172,000

$

14,090,000

$

13,646,000

Net income (loss) attributable to Toys

216,000

(13,000)

(65,000)

Alexander’s, Inc. (NYSE: ALX) (“Alexander’s”)

At December 31, 2009 and 2008, we owned 32.4% and 32.5%, respectively, of the outstanding common shares of Alexander’s. We manage, lease and develop Alexander’s properties pursuant to the agreements described below which expire in March of each year and are automatically renewable. At December 31, 2009 the market value (“fair value” pursuant to ASC 820) of our investment in Alexander’s, based on Alexander’s December 31, 2009 closing share price of $304.42, was $503,531,000, or $310,357,000 in excess of the carrying amount on our consolidated balance sheet.

As of December 31, 2009, the carrying amount of our investment in Alexander’s excluding amounts owed to us, exceeds our share of the equity in the net assets of Alexander’s by approximately $61,261,000. The majority of this basis difference resulted from the excess of our purchase price for the Alexander’s common stock acquired over the book value of Alexander’s net assets. Substantially all of this basis difference was allocated, based on our estimates of the fair values of Alexander’s assets and liabilities, to real estate (land and buildings). We are amortizing the basis difference related to the buildings into earnings as additional depreciation expense over their estimated useful lives. This depreciation is not material to our share of equity in Alexander’s net income or loss. The basis difference related to the land will be recognized upon disposition of our investment.

Management and Development Agreements

We receive an annual fee for managing Alexander’s and all of its properties equal to the sum of (i) $3,000,000, (ii) 3% of the gross income from the Kings Plaza Regional Shopping Center, (iii) $0.50 per square foot of the tenant-occupied office and retail space at 731 Lexington Avenue and (iv) $241,000, escalating at 3% per annum, for managing the common area of 731 Lexington Avenue.

In addition, we are entitled to a development fee of 6% of development costs, as defined, with a minimum guaranteed payment of $750,000 per annum. During the years ended December 31, 2009, 2008 and 2007, we recognized $2,710,000, $4,101,000 and $4,482,000, respectively, of development fee income.

Leasing Agreements

We provide Alexander’s with leasing services for a fee of 3% of rent for the first ten years of a lease term, 2% of rent for the eleventh through twentieth year of a lease term and 1% of rent for the twenty-first through thirtieth year of a lease term, subject to the payment of rents by Alexander’s tenants. In the event third-party real estate brokers are used, our fee increases by 1% and we are responsible for the fees to the third-parties. We are also entitled to a commission upon the sale of any of Alexander’s assets equal to 3% of gross proceeds, as defined, for asset sales less than $50,000,000, or 1% of gross proceeds, as defined, for asset sales of $50,000,000 or more. The total of these amounts is payable to us in annual installments in an amount not to exceed $4,000,000 with interest on the unpaid balance at one-year LIBOR plus 1.0% (3.02% at December 31, 2009).

Other Agreements

Building Maintenance Services (“BMS”), our wholly-owned subsidiary, supervises the cleaning, engineering and security services at Alexander’s 731 Lexington Avenue and Kings Plaza properties for an annual fee of the costs for such services plus 6%. During the years ended December 31, 2009, 2008 and 2007, we recognized $2,083,000, $2,083,000 and $3,016,000 of income, respectively, under these agreements.

Below is a summary of Alexander’s latest available financial information:

(Amounts in thousands)

Balance Sheet:

As of December 31, 2009

As of December 31, 2008

Assets

$

1,704,000

$

1,604,000

Liabilities

1,389,000

1,423,000

Noncontrolling interests

2,000

2,000

Equity

313,000

179,000

For the Year Ended

Income Statement:

December 31, 2009

December 31, 2008

December 31, 2007

Total revenue

$

224,000

$

211,000

$

208,000

Net income attributable to Alexander’s

133,000

76,000

114,000

Lexington Realty Trust (“Lexington”) (NYSE: LXP)

Prior to October 28, 2008, we owned 8,149,592 limited partnership units of Lexington Master Limited Partnership which were exchangeable on a one-for-one basis into Lexington common shares, or a 7.7% limited partnership interest. On October 28, 2008, we acquired 8,000,000 Lexington common shares for $5.60 per share, or $44,800,000. The purchase price consisted of $22,400,000 in cash and a $22,400,000 margin loan recourse only to the 8,000,000 shares acquired. In addition, we exchanged our existing limited partnership units in Lexington MLP for 8,149,592 Lexington common shares. As of December 31, 2009, we own 18,468,969 Lexington common shares, or approximately 15.2% of Lexington’s common equity. We account for our investment in Lexington on the equity method because we believe we have the ability to exercise significant influence over Lexington’s operating and financial policies, based on, among other factors, our representation on Lexington’s Board of Trustees and the level of our ownership in Lexington compared to that of other shareholders. We record our pro rata share of Lexington’s net income or loss on a one-quarter lag basis because we file our consolidated financial statements on Form 10-K and 10-Q prior to the time that Lexington files its financial statements.

Based on Lexington’s December 31, 2009 closing share price of $6.08, the market value (“fair value” pursuant to ASC 820) of our investment in Lexington was $112,291,000, or $57,185,000 in excess of the carrying amount on our consolidated balance sheet. During 2009, we recognized $19,121,000 for our share of impairment losses recorded by Lexington related to its investment in Concord Debt Holdings LLC. During 2008, we concluded that our investment in Lexington was “other-than-temporarily” impaired and recognized an aggregate non-cash impairment loss of $107,882,000. Our conclusion was based on the deterioration in the capital and financial markets and our inability to forecast a recovery in the near-term. These losses are included as a component of “(loss) income from partially owned entities,” on our consolidated statements of income.

As of December 31, 2009, the carrying amount of our investment in Lexington was less than our share of the equity in the net assets of Lexington by approximately $87,579,000. This basis difference resulted primarily from the aggregate of $107,882,000 of non-cash impairment losses recognized during 2008. The remainder of the basis difference related to purchase accounting for our acquisition of an additional 8,000,000 common shares of Lexington in October 2008, of which the majority relates to our estimate of the fair values of Lexington’s real estate (land and buildings) as compared to their carrying amounts in Lexington’s consolidated financial statements. We are amortizing the basis difference related to the buildings into earnings as additional depreciation expense over their estimated useful lives. This depreciation is not material to our share of equity in Lexington’s net income or loss. The basis difference attributable to the land will be recognized upon disposition of our investment.

Below is a summary of Lexington’s latest available financial information:

(Amounts in thousands)

Balance Sheet:

As of
September 30, 2009

As of
September 30, 2008

Assets

$

3,702,000

$

4,294,000

Liabilities

2,344,000

2,745,000

Noncontrolling interests

94,000

625,000

Shareholders’ equity

1,264,000

924,000

For the Twelve Months Ended

Income Statement:

September 30, 2009

September 30, 2008

September 30, 2007

Total revenue

$

399,000

$

447,000

$

387,000

Net (loss) income attributable to Lexington

(177,000

)

49,000

62,000

GMH

In June 2008, pursuant to the sale of GMH’s military housing division and the merger of its student housing division with American Campus Communities, Inc. (“ACC”) (NYSE: ACC), we received an aggregate of $105,180,000, consisting of $82,142,000 in cash and 753,126 shares of ACC common stock valued at $23,038,000 based on ACC’s then closing share price of $30.59, in exchange for our entire interest in GMH. We subsequently sold all of the ACC common shares. The above transactions resulted in a net gain of $2,038,000 which is included as a component of “net gains on disposition of wholly owned and partially owned assets other than depreciable real estate” in our consolidated statement of income.

Real Estate Joint Ventures’ Development Costs

During 2008, we recognized non-cash losses aggregating $96,037,000, for the write-off of our share of certain partially owned entities’ development costs, as these projects were either deferred or abandoned. These losses include $37,000,000 for our share of costs in connection with the redevelopment of the Downtown Crossing property in Boston and $23,000,000 for our share of costs in connection with the abandonment of the “arena move”/Moynihan East portions of the Farley project. These losses are included as a component of “(loss) income from partially owned entities,” on our consolidated statement of income.

Condensed Combined Financial Information of Partially Owned Entities

The following is a summary of combined financial information for all of our partially owned entities, including Toys, Alexander’s, and Lexington, as of December 31, 2009 and 2008 and for the years ended December 31, 2009, 2008 and 2007.

(Amounts in thousands)

December 31,

Balance Sheet:

2009

2008

Assets

$

23,188,000

$

23,694,000

Liabilities

18,164,000

18,787,000

Noncontrolling interests

227,000

739,000

Equity

4,797,000

4,168,000

For the Years Ended December 31,

Income Statement:

2009

2008

2007

Total revenue

$

14,337,000

$

15,313,000

$

14,821,000

Net loss

(51,000)

(54,000

)

(144,000

)

Investments in partially owned entities as of December 31, 2009 and 2008 and income recognized from these investments for the years ended December 31, 2009, 2008 and 2007 are as follows:

Percentage

Investments:(Amounts in thousands)

Ownership as of

As of December 31,

December 31, 2009

2009

2008

Toys (see page 127)

32.7%

$

409,453

$

293,096

Alexander’s (see page 127)

32.4%

$

193,174

$

137,305

Partially owned office buildings (1)

(1)

158,444

157,468

India real estate ventures

4%-36.5%

93,322

88,858

Lexington (see page 129)

15.2%

55,106

80,748

Other equity method investments (2)

(2)

299,786

325,775

$

799,832

$

790,154

Our Share of Net Income (Loss):

For the Years Ended December 31,

(Amounts in thousands)

2009

2008

2007

Toys:

32.7% share of:

Equity in net income (loss) before income taxes

$

58,416

(3)

$

53,867

$

(31,855

)

Income tax benefit (expense)

13,185

(44,752)

10,898

Equity in net income (loss)

71,601

9,115

(20,957

)

Non-cash purchase price accounting adjustments

13,946

(14,900)

—

Interest and other income

6,753

8,165

6,620

$

92,300

$

2,380

$

(14,337)

Alexander’s:

32.4% share in 2009, 32.5% in 2008 and 32.8% in 2007 of:

Equity in net income before reversal of stock
appreciation rights compensation expense